GARNISHEE ORDER

AND IT’S
LIMITATIONS
-
-
Ramaskandha
Vikas K
- HB Chirag
- Utsav BC
What is a Garnishee Order?
◦ A Garnishee Order is an order issued by court under provisions of Order 21, Rule 46 of the Code of Civil
Procedure, 1908.
◦ The concept of ‘Garnishment’ has been introduced in civil procedure code under Order 21 Rule 46 A to
46 I by the amendment Act, 1976.
◦ Garnishee means a judgment-debtor's debtor/Third Party (Eg: Bank, Lessee)
◦ Garnisher is a judgment-creditor (decree-holder) who initiates a garnishment action to reach the debtor’s
property that is thought to be held or owed by a third party.
◦ The primary object of a garnishee order is to make the debt due by the debtor of the judgment debtor
available to the creditor (decree holder) in execution without driving him to the suit.
Legal Provisions
◦ Order 21 Rule 46 A to Rule 46 I of Code of Civil Procedure, 1908 deals with Garnishee orders.
◦ Rule 46-A: Notice to garnishee
◦ Rule 46-B: Order against garnishee
◦ Rule 46-C: Trial of disputed questions
◦ Rule 46-D: Procedure where debt belongs to third person
◦ Rule 46-E: Order as regards third person
◦ Rule 46-F: Payment by garnishee to be valid discharge
◦ Rule 46-G: Costs
◦ Rule 46-H: Appeals
◦ Rule 46-I: Application to negotiable Instruments
Garnishee Order
◦ A garnishee order is typically issued when a creditor you owe money to has obtained a default judgement
from a court or other authority against you.

◦ The judgement then allows the creditor to issue a court order that instructs a third party such as your
employer, bank or financial institution to redirect your wages or holdings to the creditor you owe money
to.

◦ Once a garnishee order has been issued, your employer, bank or financial institution is legally obligated
to comply with it.
Example
1. Suppose A owes Rs. 1000 to B and B owes Rs. 1000 to C. by a garnishee order the court may require A
not pay money owed to him to B, but instead to Pay C, since B owes the said amount to C, who has
obtained the order.

2(a). Suppose A owes B Rs 2,000/. A refuses to repay the amount to B and B sues A. He obtains a decree in
his favor. Here B is a judgment-creditor and A is the judgment-debtor.
2(b). B comes to know that A has some money in a bank account and would like to have his decree
satisfied by attaching the funds in the hands of A's bank. For this purpose he approaches a court and obtains
a Garnishee order attaching funds at the bank standing to the credit of A.
2(c). In this e.g., A, is the garnishee and B is the Garnisher (Person who initiates action).
Example
3(a). Suppose the husband and wife got divorced, and the husband was required in terms of a judgment to
pay monthly maintenance of Rs 5000 to his wife, but he failed to pay.
3(b). The wife applied to court for a garnishee order, and the court ordered the husband's lessee (of the
husband's private property) to pay the rent of Rs 5000 to the wife instead of the husband.
Types of Garnishee Order
◦ A Garnishee Order is issued in two stages, first as an Order Nisi and then an Order Absolute.
1. Order of Nisi:
a. On receipt of Order Nisi, Bank is bound to stop operation of the account.
b. The Bank must immediately inform the customer about the receipt of the order.
c. The court asks the bank to show cause why funds in the customer’s account cannot be paid to the judgment
creditor.
2. Order Absolute
d. If the banker disputes his liability to judgment debtor (Customer of the Bank) or has any lawful objection to
pay, the banker must appear in court and show cause for why funds available in the customer’s account cannot
be paid.
e. After receipt of the explanation of Bank ,Court may issue Order Absolute.
On receipt of an “Order absolute", Bank has to pay the amount to the court.
Garnishee Order in Banking
◦ The court can give garnishee order to bank in which case bank will stop operations in the judgment
debtor’s account up to amount mentioned in the garnishee order and allow the operations for balance
amount.

◦ A court order instructing a garnishee (a bank) that funds held on behalf of a debtor (the judgement
debtor) should not be released until directed by the court.

◦ The order may also instruct the bank to pay a given sum to the judgement creditor (the person to whom a
debt is owed by the judgement debtor) from these funds.
Accounts to be attached
◦ Garnishee Order extends only to those accounts which are held in the same capacity in which the order is
issued and not to accounts held otherwise.
◦ If the Garnishee Order is in the name of A, but the account in joint names of A, B and C, the account is
not attached. However, if the Garnishee Order is in the joint names of say A, B and C, it will not only
attach the joint accounts of A,B,& C, but also accounts in their individual names.
◦ A Garnishee Order issued in the name of a partnership firm, extends to the balance in the firm’s accounts
book in the individual names of the partners.
◦ Where the Garnishee Order is in the name of individual, it would extend to any account maintained by
him in the name of a firm as sole proprietor.
◦ Accounts held by a person in trust are not attached by a Garnishee Order issued in the individual name.
Accounts not to be attached
◦ Funds belonging to deceased constituents are not attachable by a Garnishee Order.
◦ Funds in the name of an undischarged insolvent are not attachable by a Garnishee Order.
◦ Garnishee Order can attach Term deposits only on its maturity.
◦ Uncleared balances in SB/CD account cannot be attached.
◦ A Garnishee order cannot attach salary fully.
◦ The Undrawn portion of a cash credit account cannot be attached as it is not a debt due.
Preventing a Garnishee Order
◦ A person or the principal debtor can prevent the passing of a garnishee order by the court of law. He can
file an application before the court of law regarding the same.
◦ However, the court has the power to reject the application depending upon several factors and
circumstances.
Steps/Methods to prevent the court from passing a garnishee order against the principal debtor :
1. Pay the full debt
◦ The principal debtor can prevent the court from passing a garnishee order if he pays the full debt of the
creditor on the time given by the court of law.
◦ The court can extend the time to pay the debt to the creditor instead of passing garnishee order.
Preventing a Garnishee Order

2. Alternative repayment
◦ The principal debtor can make certain arrangements with the creditor to pay back the amount in an
alternative way which is suitable to both the parties.
3. Pay by instalments
◦ The principal debtor has the power to approach before the court of law assuring to pay the debt amount
by instalments through the court.
◦ The principal debtor can submit his financial report to the court as a mechanism to pay the due amount in
the instalments.
4. Insolvency and Bankruptcy Code, 2016
◦ If the principal debtor took the defence under the provisions of the Insolvency and Bankruptcy Code,
2016 then the garnishee order passed against him will be terminated.
Judicial Decisions
1. In the case of K Jayaraman & etc v. TS Ravi & Ors. AIR 2001 Mad 422, the court held that the
garnishee must agree to the debt of the judgment debtor. If the garnishee refuses to accept the debt of
the garnishee then it is the duty of the court not to pass any such order against the garnishee compelling
him to pay a certain amount to the decree-holder.
2. In the case of Mackinnun Mackenzie & Co v. Anil Kumar AIR 1975 Cal 150, the court held that
where the garnishee disputes his liability, the court must raise an issue and determine the liability of the
garnishee. Where a court finds that the dispute between the parties is bona fide and not false then the
action cannot be taken under this rule of Order 21 of the Code.
Judicial Decisions
3. In the case of Food Corporation of India v. Sukh Deo Prasad AIR 2009 SC 2330 , the court observed
that a garnishee can set off his claim for the amount due to him by the judgment debtor.
The court further held that the garnishee proceedings are governed by Rules 46 and 46 A to 46 F of order
21 of the Code and the court may issue a notice to the garnishee liable to pay such debt, calling upon him
either to pay into court the debt due from the debtor or to appear and show cause why should not do so.
4. In the case of Global trust bank Ltd. V. Fargo Freight ltd. & Ors. AIR 2002 Del. 13, the court held that
order 21 rule 46 A not only applies to the debt of the party other than mortgage debt but the negotiable
instrument can also be attached by the court. Further, it was observed that it is the prima facie duty of the
garnishee to reveal the liability dispute before the court of law.